7 Crash-Proof Dividend Stocks

High dividend stocks are a great way to provide income from your portfolio. But more importantly, good high dividend stocks provide stability in times of trouble.

And there’s a lot trouble out there right now for the stock market.

Russia is flexing its muscles in Crimea, and there’s the threat of further aggression or sanctions that will hurt economic growth across Europe. There’s the Federal Reserve continuing its “taper”[1] and sucking money out of the market, with all the volatility that comes with such policies. And then there’s all this unseasonably cold weather hurting seasonal hiring and consumer trends across America.

Q1 earnings are right around the corner, and we could perhaps see the impact of these trends in corporate profits — damaging the market this spring.

If that happens, high dividend stocks could be your safest bet as well as your best way to turn a decent profit.

So if you’re rattled by the recent events on Wall Street and around the world, here are seven stable dividend stocks to hide out in:

High Dividend Stocks — Transocean (RIG)

Oil stocks haven’t really been all that kind to investors over the last few years as weak pricing coupled with weaker energy demand in emerging markets has hurt the bottom line.

But one sector I’m bullish on going forward are deepwater drillers, including leader Transocean (RIG[2]). The bottom line is that the world’s easy oil is gone and that integrated oil companies like Exxon (XOM[3]) are increasingly turning to harder-to-access deepwater fields in order to bolster reserves.

There are risks, obviously, as we saw with the Gulf of Mexico oil spill. But RIG stock has stabilized after that 2011 disaster and has reinstated its dividend at a hefty 5.6% yield. Furthermore, the dividend payout is less than half of fiscal 2014 earnings, so future increases are likely.

As for valuation, Transocean now trades for about 8.5 times forward earnings. That’s roughly half the 15.5 forward P/E for the broader S&P 500. Dividend stocks with cheap P/E ratios are hard to beat.

Sure, Transocean continues to see weak drilling demand (and subsequently weak revenue[4]) in the short-term. But Transocean remains a leading deepwater driller and offshore oil will remain a big part of the global energy picture for decades to come.

After dropping precipitously from its 2011 highs, the negativity has been priced in — and even if RIG stock moves sideways for a bit, the hefty 5.6% yield will keep your portfolio strong.

High Dividend Stocks — Huntsman (HUN)

Market Cap: $5.7 billionDividend Yield: 2.1%Sector: Chemicals

Sure, the current dividend yield of 2.1% for Huntsman (HUN[5]) isn’t super impressive, especially compared to other dividend stocks on this list. But that dividend is just 22% of projected 2014 earnings and ripe for big increases.

The stock is a rather boring chemicals player, focusing on dyes and polyurethanes among other things. It’s a fraction of the size of larger peers DuPont (DD[6]), 3M (MMM[7]) and Dow Chemical (DOW[8]) but also happens to be a better value based on future earnings; the forward price-to-earnings ratio of Huntsman is about 9.1 right now vs. 14 or higher for these large-cap chemical companies.

After basically flat revenue in 2013, the forecast for 2014 at Huntsman indicates 6% revenue growth — which isn’t killer, but IS higher than Dow or DuPont. Furthermore, 2014 profits are set to jump an impressive 15% to 20% over last year, according to analysts.

Huntsman was hit hard by the Great Recession, failing to turn a profit in both 2009 and 2010. And there is a risk that as a much smaller player in the chemical space, a downturn could hit Huntsman stock harder than its larger peers.

But the flip side is equally true. If and when the economy turns around, Huntsman may see outsized growth — both in share price and in its dividend. It also could be a buyout target as the big chemical players look to increase their reach in the years ahead.

High Dividend Stocks — Blackstone Group (BX)

Market Cap: $18.9 billionDividend Yield: 4.1%Sector: Financials

Blackstone Group (BX[9]) is a money management and private equity group that is one of the biggest names in capital markets. While the 2008 and 2009 downturn was obviously ugly for Blackstone … the resulting recovery for the economy, the financial sector and the broader investing community has resulted in a huge run for BX stock.

Blackstone is up over 65% in the last year, and has roughly tripled from its 2012 lows. But thanks to the structure of the partnership, dividends have increased dramatically in the same period — from 10 cents in mid-2012 to a payday of 58 cents to start 2014.

While it’s difficult to calculate yield based on these volatile payments, the last four dividend payments to BX stockholders add up to $1.34 — good for a 4.1% yield.

The firm saw its asset under management grow to record levels on 2013 on the back of a roaring stock market, and there is nothing preventing Blackstone from continuing that trend going forward. A robust IPO and private equity market coupled with improving investor sentiment should help both sides of this company’s business via both money management as well as business investment deals.

In January, Blackstone just reported that its fiscal Q4 earnings more than doubled year-over-year and the company continues to perform well in 2014. If you’re looking for solid dividend stocks, you could do a lot worse than BX stock.

High Dividend Stocks — Cisco (CSCO)

Market Cap: $114.5 billionDividend Yield: 3.4%Sector: Technology

Cisco (CSCO[10]) has had plenty of detractors over the last few years. The stock is up just 70% from the March 2009 lows vs. 170% for the S&P 500 index. And longer term, over the last 10 years is actually slightly in the red vs. 60% or so for the S&P.

But for long-term investors in dividend stocks, Cisco could hold serious potential as a value play — especially at current pricing.

Cisco doesn’t have a long dividend history, but it initiated a dividend in 2011 at 6 cents per share each quarter and has already tripled that to 19 cents after its most recent dividend increase. Furthermore, even after this steep increase, the dividend payout ratio is only about 38% of earnings. That’s easily sustainable, and even ripe for future increases in dividends.

Sure, the most recent Cisco earnings [11]did forecast a sales decline — not a good sign for dividend stocks that have struggled with their top line previously. But investors have heard this story many times before, so the narrative isn’t new. And don’t forget Cisco actually topped expectations in earnings.

With a forward price-to-earnings ratio of about 10 and a hefty $47 billion in the bank, Cisco seems to be a fair value at current pricing. Long-term investors who want to play the tech sector and get a good dividend could do worse than look Cisco’s way.

High Dividend Stocks — China Mobile (CHL)

But if you’re looking for an alternative to these players, consider China telecom giant China Mobile (CHL[14]) which has a respectable 5.1% yield itself. Unlike entrenched U.S. companies with little room for revenue growth, CHL just reported double-digit sales growth in 2013.

And considering it already commands more than 750 million mobile subscribers — almost two thirds the mobile users in China and more than twice the entire population of the U.S. — that kind of growth is impressive, given its current scale.

Sure, China is a rocky region to invest in now — and China Mobile just upset investors with a big drop in earnings[15] thanks to big investment in its network last year. But the company is growing fast and remains the dominant telecom provider in a country that is getting more wired every day. Much of the negativity has already been priced in, in my mind.

On the dividend front, China Mobile has been kind to shareholders by increasing its payouts steadily; its dividend has grown 550% in 10 years vs. just 47% for AT&T and 38% for Verizon in the same period. Furthermore, the China Mobile dividend payout ratio is about half of forecasted 2014 earnings vs. almost 69% for AT&T and 65% for Verizon.

More growth potential, more dividend potential? Sounds like one of the best telecom dividend stocks to me.

High Dividend Stocks — Microsoft (MSFT)

Market Cap: $333.7 billionDividend Yield: 2.8%Sector: Telecom

Like Cisco, Microsoft (MSFT[16]) is another tech stock that has been written off as dead money by a lot of investors. But perhaps those investors haven’t been paying attention lately.

Shares of MSFT stock are up more than 40% in the last 12 months. That’s more than the 33% gain for the Nasdaq in the same period, and more than its arch rival Apple (AAPL[17]), which has put up a measly 17% in the same period.

All this and Microsoft still has a reasonable forward P/E of about 13, and more than $98 billion in cash and investments.

Now, it’s hard to argue against the fact that Microsoft has staying power. But what makes it a buy right now, and how can investors have faith the dividends will keep flowing as share will power higher?

First, new CEO Satya Nadella[18] and his experience running the cloud computing arm of Microsoft will help existing products evolve and succeed. That’s crucial if MSFT is going to move beyond its reliance on Windows, Office and other PC-focused revenue.

Furthermore, Microsoft’s mobile business is going strong. Windows Phone now commands a double-digit market share in Europe[19], and what with BlackBerry (BBRY[20]) abdicating the consumer market for smartphones, that will only continue to grow. The integration of Nokia (NOK[21]) hardware as a result of a $4.9 billion buyout proposal[22] late last year will fuel momentum, too.

With its stock at a fair value, dividends sustainable and tons of cash on the books, patient investors should give Microsoft a shot to prove its potential to them. Though it may not provide the pop of one of the tech sector’s newest darlings, other dividend stocks will have a tough time matching the dividend potential and stability.

High Dividend Stocks — Health Care REIT (HCN)

Market Cap: $17.0 billionDividend Yield: 5.5%Sector: Real estate

Dividend investors love real estate investment trusts (REITs). These companies are a special class of business required to pay out most of the earnings as dividends in exchange for certain tax benefits.

But while real estate broadly may be a bit risky after the mortgage meltdown, Health Care REIT (HCN[23]) has a focus that keeps it rock solid. As the name implies, Health Care REIT focuses only on healthcare-related properties including senior housing, long-term care and medical office facilities.

What with an aging Baby Boomer population and the push of Obamacare, the tenants in HCN properties have no shortage of “customers” these days — and that means reliable leases, reliable revenue and reliable dividends to investors as a result.

Health Care REIT has underperformed lately after a big acquisition spree (led by the $845 million buyout of Sunrise[24]) increased costs, pinching profits. In fact, last year, the company paid out more dividends than what it earned in after-tax profits.

But long-term, the buyouts will serve HCN well as it increases market share and gets scale with these new properties. It remains one of the highest-yielding dividend stocks in the S&P 500[25] and will be a stable income investment for years to come.

Jeff Reeves[26] is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks.[27] As of this writing, he did not hold a position in any of the aforementioned securities. Write him ateditor@investorplace.com[28] or follow him on Twitter via@JeffReevesIP[29].